Hill International senior vice president and managing director of Middle East project management group, Mohammed Al Rais, explains how the firm is introducing the concept of project management to Iraq
Along with the established markets of Saudi Arabia and Qatar, Iraq is increasingly tipped as the place to go. With immediate opportunities in affordable housing, social infrastructure and power projects, Iraq is the fastest growing construction market in the region. Since the 2003 invasion, the U.S. government has committed in total more than US $61 billion to reconstruction projects.
Such potential is reflected in the market reactions to news of new projects. In June 2011, upon the announcement of a US $1.5b social housing and infrastructure contract, the price of Hill’s shares rose 60%. The legacy of the three year contract will include 500,000 affordable homes with a market value of $200m, in association with subsidiary HillStone and project partner TRAC, a Korean developer.
“The strongest markets in the Middle East over 2012 will definitely be Saudi Arabia and by the end of 2012 we think that Iraq is going to be very close behind,” says senior vice president and managing director of Middle East project management group, Mohammed Al Rais.
“Major programmes will be initiated in Iraq and I think the country is reaching a stage where they finally have to actually start the project implementation rather than planning and talking, “ Al Rais adds, specifically referring to the need for ports, airports, bridges, railways, “the whole nine yards”.
Yet Hill’s involvement in the war-torn country doesn’t end at infrastructure development. It was during a contract with one of the country’s ministries that Hill began to advise Iraq on how to operate tenders.
Recalling how the department challenged Hill to demonstrate how they could better handle the process, Al Rais says that after explaining the different process the ministry enlisted Hill’s help on another eight contracts.
Having entered through the American arm of the business almost a decade ago, it was in 2010 that regional offices were established in Baghdad and Erbil and today Al Rais says major programmes are expected “by February at the latest”. Personally, he sees opportunities in the construction of hotels, airports, stadiums and apartments, with the Ministry ofSport one of the most active.
Fit for duty
The country’s urgent requirements are for functional, liveable cities, built to market demand, but with little external guidance managing those projects has proven difficult.
“Project management isn’t very well known in Iraq – they work like other markets did 50 years ago,” observes Al Rais, as he says that Hill’s construction projects will also encompass training programmes in project management.
“It’s simple, fifty years ago a project required a contractor who did it all. Thirty years ago it was a consultant who designs, supervises and controls. Again, project management is something they are not used to so we are having difficulty entering that market as a PM company, and explaining what PM is, the control systems, the process, procedures and so on,” Al Rais adds.
“It’s a big battle. But we are at a stage now where we not only execute projects for them, but set up systems,” he continues, elaborating that similar liaison occurs during projects with Saudi Arabia’s government, including the implementation of workflow systems.
In training the next – or first, in this case – generation of project managers, Hill uses a shadow technique, due to be trailed in Egypt and Libya until political unrest stopped projects last year. Pairing a professional consultant or project manager with a trainee counterpart, the two work together for a fixed amount of time, autonomously but under the professional’s guidance.
“The other stuff is where we come in and look at the system of how they actual procure and value contracts. We set up a process for a task so if they are going for contracts, we will standardise them and have elements that can be removed or added as seen fit, but there will be one form of contract that fits all,” Al Rais says, reporting an “excellent” reaction to the initiative.
Praising the calibre of local talent, Al Rais says there is a lot of local talent to call on when it proves difficult to recruit from beyond the borders.
The next move
Noticing that Dubai was in danger of over-heating before the 2008 crash, Hill’s regional and global management took the decision to expand operations. While Dubai’s ambition and future potential is still held in high regard within the firm, the focus now is on the markets entered immediately prior to the downturn: Saudi Arabia, Qatar, Iraq and North Africa.
“When moving into different geographies you need to be ahead of the game. You need to have an oversight of what is going to happen. That is why in 2008 we didn’t wait for the bubble to burst. It’s about identifying the market and potentials,” he says, advising not to “go in blind” and to identify partners and circumstances in advance.
“Do your homework,” he adds, before advising on the move into new business streams, rather than new geographical markets. In such circumstances, Hill establishes sister companies to which it can sub-contract specialist work, an approach taken on the Bahrain Airport contract.
“Companies who come in are always within particular specialities, whether it’s architecture or infrastructure or whatever. It’s not so much diversifying within as joining hands with others. If someone wants to go in and do something, the issue is to identify partners and build teams that work.”
“This is going to be the biggest thing where Iraq is concerned, there is a lot of work out there but the most important thing for companies who want to come in and do business is to really know the local market.”
“Know the local market, know the local conditions. As a firm, we have acquaintances who want to come into a certain market and set up, so we do the introduction but then let them move on. For us it’s important that the market carries the quality and that eliminates the cowboy outfits that hurt everyone at the end of the day.”
The regional hotspots
“Things are regularly announced but many things never happen. Once things eventually settle down politically we predict Kuwait will have one of the biggest programmes. They have announced something in the region of $50 billion in projects that never seem to come online. They are O.K. security wise, so the issue isn’t security as much as establishing the democracy and plans.”
“Oman in picking up with the airport and port projects. We have a registration in Oman, our claims group is already there and we are now entering to look at opportunities. There are major projects in ports, airports, rail and infrastructure, but in scale nothing compares to Saudi at the moment.”
“There are companies who are still owed a lot of money. The hope is that once the dust settles and everything is clear I am sure everybody will be back. Libya will welcome those people back because they still need them to build the country.”
“It will come back, mature. We have all learned and Dubai has learned and matured dramatically.
“With Dubai it just became too big in too short a time. They set up a pace in an Emirate that has everything you want. What they have achieved and the number of architects, constructors, contractors – it’s an example that still stands today in the Gulf and the attempts to imitate Dubai are still there.
“The way to reach the market is much more mature now and hopefully they will have all the by-laws in place for investors and so on.
“In the Middle East the biggest market for us was Abu Dhabi and we had almost 600 people there in 2008. Today it is a little slow and nobody is really sure why.”